China to repeal coal tariff after FTA

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Image credit: MorgueFile

China will repeal the import tariffs on Australian coal as part of the two nations’ free trade negotiations, with Tony Abbott agreeing to delay imposing tougher scrutiny of foreign investment in agriculture until after the agreement is signed, The Australian reports.

Image credit: MorgueFile
Image credit: MorgueFile

It is understood that Trade Minister Andrew Robb had already secured a deal with China that under the FTA there would be no tariffs on Australian coal before Beijing this month announced a surprise levy on coal imports.

China, the world’s top coal producer and consumer, announced the reintroduction of levies of 3% on coking coal and 6% on thermal coal for countries with which it did not hold an FTA in an effort to protect local domestic trade and improve the environment protection.

Mr Robb said he did not believe that the announcement of coal tariffs a fortnight ago was directed at Australia or the FTA negotiations, which the Government hopes to conclude next month.

Joe Hockey said the Australian Government was not aware the Chinese Government was planning to raise the tariffs despite being close to finalising an FTA between the two countries.

“It was a surprise … no one had a heads up,” he said.

Mr Hockey met Chinese Finance Minister Lou Jiwei in the Chinese capital ahead of the APEC finance ministers meeting and raised Australia’s concerns at the higher costs faced by its coal producers.

“I had an open and forthright discussion with Lou Jiwei about it. He pointed out that Chinese coal producers are facing real challenges in terms of costs and I pointed out that Australians faced similar challenges by reducing their costs,” Mr Hockey said.

“He pointed out that China has imposed these tariffs in response to some of its air pollution problems and he recognised that Australia is the cleanest coal in the world so there was not much room to move other than for him to point out that countries that have FTAs with China are not affected by the tariffs. We both agreed to make sure the FTA happens fast.”

Mr Hockey said the tariffs were a “regressive step” that placed Australian producers at a competitive disadvantage until the FTA is signed

“We want to see our way through it and the answer that we agreed upon was the FTA. Once we have an FTA, it will be abolished. The quicker we get an FTA, the quicker the tariffs will go. I think on both sides we are now more determined to get this done. I suspect it has caused some embarrassment to some people in China and it is a source of frustration for us, but there is a way through.”